The Central Bank of Nigeria (CBN) monetary policy committee (MPC), on Tuesday, cut down the key lending rate from record-high 14% to 13.5% – the first time in almost 3 years.
This is the outcome of the second monetary policy meeting of the central bank, setting policy direction for the country after the 2019 elections.
Godwin Emefiele, CBN governor, while reading communique at the end of the two-day, said the committee cut the lending rate to 13.5% while retaining CRR at 22.5% and Liquidity Ratio at 30%.
The country’s Monetary Policy Rate (MPR), its benchmark interest rate was raised to 14% in July 2016 to tame inflation and support troubled local currency, naira.
Despite projecting inflation rate to rise to 12% this year, the monetary authority went ahead to cut key lending rate against major analysts projection.
What does this mean for the economy?
The simple implication of the outcome of the policy-setting committee of the Central Bank Of Nigeria (CBN) is that it will make it cheaper to borrow and grow the economy.
Though, not too significant at 0.5%, this drop should encourage the consumer to spend more, firms to take more loans and open more investment doors.